Identify Funding Needs for the Just Transition

Jakarta, 30 April 2024 – The energy transition process is entering a new phase with the Just Energy Transition Partnership (JETP) funding which was agreed in 2022. The availability of affordable funding is a real challenge for the energy transition process. In the latest study, Identifying Finance Needs for a Just Transformation of Indonesia’s Power Sector, conducted by the Institute for Essential Services Reform (IESR) and the New Climate Institute (NCI), underscoring Indonesia’s funding needs for the energy transition reached USD 2.4 billion.

Wira Agung Swadana, Green Economy Program Manager, IESR, emphasized that without financing, transformation will not occur. It is also important to build community resilience at the site level so that communities do not experience negative impacts from the ongoing energy transition process.

“Transitional changes need to be made in society, apart from the fact that we will not be dependent on fossil energy, but we need to see the economic transformation in the area, especially coal producing area,” said Wira.

Reena Skribbe, Climate Policy Analyst, New Climate Institute, explained that based on this released report, ending coal operations according to the JETP target scenario would have the potential to avoid health costs of USD 150 billion, and the potential to avoid premature deaths due to air pollution of up to 240 thousand people in 2050.

“There are two scenarios that we use in this study. First, the JETP scenario is in line with the JETP emission reduction target of 290 metric tons of CO2, and JETP+ is in line with the Paris Agreement target,” explained Reena.

The results of the JETP+ scenario of ending coal operations will be able to secure health costs of around USD 230 billion and avoid a total of 360 thousand premature deaths from air pollution by mid-century.

Farah Vianda, Sustainable Finance Coordinator, IESR, added that the fate of workers currently working in the mining sector needs to be considered so that they do not lose their livelihood.

“To prepare for the transition process, especially in coal-producing areas, strong government institutional capacity is needed. So, it is important to increase government capacity and establish formal institutions that focus on managing a just transition,” said Farah.